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MEDICAL SAVINGS ACCOUNTS MSA’s PORTABILITY/CARRYOVER OF FUNDS An Archer MSA belongs to individual owner and is portable between jobs. IRC § 220(f)(5); Notice 96-53, Q & A 1, 1996-2 CB 219. Amounts not distributed by the end of a taxable year may be carried over into the next year. IRC § 220(d)(1)(E). DEATH/DIVORCE Death: If the account holder’s spouse is the designated beneficiary, following the death of the account holder and the transfer of interest, the account continues to be treated as an Archer MSA with the spouse as the account holder. IRC § 220(f)(8)(A). If, by reason of death, a spouse who is not named as the beneficiary, or any other individual, acquires an interest in an Archer MSA, then the account is no longer an Archer MSA, and an amount equal to the fair market value of the account assets is includable in such person’s income. IRC § 220(f)(8)(B). Divorce: The transfer of all or part of an individual’s interest is an Archer MSA, which is incident to divorce, is not considered a taxable transfer, and the transferred interest is thereafter treated as an Archer MSA. IRC 220(f)(7). Note: An Archer MSA is not subject to the COBRA rules. ADMINISTRATION Archer MSA assets are held by a qualified trustee or custodian, but an individual owner may direct distributions and, where applicable, investments. ADMINISTRATION SUBSTANTIATION No substantiation is required prior to reimbursement or distribution. If requested by the IRS, the account holder of an Archer MSA must substantiate any claimed reimbursements. Notice 96-53, Q & A 23, 1996-2 CB 219. ADMINISTRATION INFORMATION REPORTING Employer contributions are required to be reported on the employee’s Form W-2, in Employees must file Form 8853, Archer MSAs and LT Care Insurance Contracts, with form 1040 to report any contributions to and distributions from MSA’s. | ||
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